Regulatory Capital Matters

12 Months Ended

Dec. 31, 2011

Regulatory Capital Matters [Abstract]

NOTE 11 – REGULATORY CAPITAL MATTERS

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believes as of December 31, 2011, the Bank met all capital adequacy requirements to which it is subject. Bank holding companies under $500 million in assets are not required to report regulatory capital ratios.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At December 31, 2011 and 2010, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution's category.

Actual and required capital amounts for the Bank and ratios at December 31, 2011 and 2010 are presented below:


											To Be Well Capitalized
						For Capital					Under Prompt
	Actual					Adequacy Purposes					Action Provisions
2011	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital to risk weighted assets	$	33,044		22.48	%	$	12,113		8.00	%	$	15,142		10.00	%
Tier 1 (Core) Capital to risk weighted assets		32,936		21.75	%		6,057		4.00	%		9,085		6.00	%
Tier 1 (Core) Capital to tangible assets		32,936		14.85	%		8,870		4.00	%		11,105		5.00	%
Tangible Capital to tangible assets		32,936		14.85	%		3,331		1.50	%		N/A		N/A

											To Be Well Capitalized
						For Capital					Under Prompt
	Actual					Adequacy Purposes					Action Provisions
2010	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital to risk weighted assets	$	33,515		21.21	%	$	12,639		8.00	%	$	15,799		10.00	%
Tier 1 (Core) Capital to risk weighted assets		32,781		20.75	%		6,320		4.00	%		9,480		6.00	%
Tier 1 (Core) Capital to tangible assets		32,781		14.71	%		8,912		4.00	%		11,140		5.00	%
Tangible Capital to tangible assets		32,781		14.71	%		3,342		1.50	%		N/A		N/A

The Qualified Thrift Lender test requires at least 65% of assets be maintained in housing-related finance and other specified areas. If this test is not met, limits are placed on growth, branching, new investments, FHLB advances and dividends, or the Bank must convert to a commercial bank charter. Management believes this test is met.

Dividend Restrictions - The Company's principal source of funds for dividend payments is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year's net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. During 2012, the Bank could, without prior approval, declare dividends of approximately $1,532 plus any 2012 net profits retained to the date of the dividend declaration.

- Definition

The entire disclosure for banks, savings institutions, and credit unions, for regulatory capital requirements imposed by the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS) or for any state imposed capital requirements, as applicable. The disclosure may include (1) a description of regulatory capital requirements (a) for capital adequacy purposes and (b) established by the prompt corrective action provisions of Section 38 of the Federal Depository Insurance Act; (2) the actual or possible material effects of noncompliance with such requirements; (3) whether the entity is in compliance with the regulatory capital requirements including (a) required and actual ratios and amounts of Tier 1 leverage, Tier 1 risk-based, and total risk-based capital, tangible capital (for savings institutions), and Tier 3 capital for market risk (for certain banks and bank holding companies), (b) factors that may significantly affect capital adequacy; (4) the prompt corrective action category in which the entity was classified as of its most recent notification; (5) whether management believes any conditions or events since notification have changed the entity's category. Also may include additional information that might be disclosed in situations where substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time.

+ References

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-Publisher AICPA

-Name Audit and Accounting Guide (AAG)

-Number AAG-DEP

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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+ Details

Cullman Bancorp, Inc. 10-K